What does the SIA S$850m Convertible Bonds mean for shareholders and MCB bondholders?

For shareholders it means dilution, therefore sightly negative.

For MCB bondholders, I feel quite negligible impact, unless that likelihood of converting to share is high (share price decreases below $4.84).

Benson Ng

Phillip Wealth Advisory

Sincere, Honest & Professional​​​

Hi there!

Mandatory convertible bonds (MCBs) are a type of bonds where the issuer borrows money from the bondholders with the obligation to redeem the bonds by a specific date.

My understanding:

In SIA’s case, it is issuing zero coupon MCBs, meaning there will be no interest payments until the redemption date, unlike the case of traditional bonds where coupons (interest) are paid at regular intervals.

SIA can either redeem the bonds before the maturity date by paying back the bondholders in one lump sum (all interest payments + principal) or pay the bondholders in SIA shares upon maturity.

Hope you get a better idea!